FSC boss says super tax ‘symbolic’ of Australia’s failing tax system
The proposed $3 million super tax is “symbolic of everything that is wrong” with the tax debate in Australia, the CEO of one of Australia’s peak financial bodies has said.
Blake Briggs, CEO of the Financial Services Council, told attendees at the recent PritchittBland Communications New Year Reception that the proposal breaches fundamental tax policy principles by taxing unrealised gains.
“Perhaps to my detriment, I am the type to call a spade a spade. I should give credit to my colleague at the SMSF Association, Peter Burgess, who has relentlessly demonstrated the fundamental issues and unfairness inherent in taxing unrealised gains,” Briggs said.
“The proposed superannuation tax is also political trickery at its crudest, designed to hit only those with over $3 million in retirement savings – rich boomers – because after all, who could object to that?”
However, Briggs noted that the tax would impact younger Australians due to the government’s decision not to index the $3 million threshold.
“Of the 500,000 working Australians who will be impacted by this tax during their lifetime, 400,000 are in their thirties or younger,” he said.
“It is disingenuous to say this tax targets older and wealthier Australians when in reality it targets younger, middle-income Australians, designed to establish what is known as a ‘structural saving’ in the budget that will be impossible for future governments to unwind.”
Briggs said if government policy continued to “tinker” with superannuation tax settings, including the repeated lowering of caps and increases in taxes, it would undermine the confidence of Australians that their superannuation is secure.
“The FSC recognises that genuine, evidence-based and economy-wide tax reform presents the most significant opportunity to generate a step change in the broader economy. To help create space for a mature tax reform debate we agree all options should be on the table.”
“It is impossible to escape the reality that at 30 per cent, Australia’s company tax rate is uncompetitive with an OECD average rate moving towards 20 per cent - a gap that is likely to further widen with the election of President Trump in the US.”
Furthermore, he said Australia’s company tax rate, compared with other major economies, had impacted its competitiveness and discouraged domestic investment.
“The FSC agrees that superannuation tax settings should form part of a holistic discussion on Australia’s tax mix.”
“Australians’ lived experience of superannuation tax changes, however, has been the regular tinkering by successive governments, undermining consumer confidence in our retirement system.”
The objective of the superannuation system, he added, was to deliver income for a dignified retirement for Australian consumers.
“Unlike the government’s ill-conceived superannuation tax - which should be withdrawn in favour of a broader tax review - future changes to superannuation tax settings should be measured against this legislated objective.”
